AVCAL controversy another blow for private equity

AVCAL chief executive Katherine Woodthorpe said she has a cordial relationship with former chairman David Brown.
AFR

by
Paulina Duran

Private equity lobby group Australian Private Equity & Venture Capital Association (AVCAL) has been forced to settle legal action brought by former chairman David Brown over the termination of his employment.

AVCAL is facing another action from a female employee for unfair dismissal. Together with the PEP case, the two AVCAL cases cast a cloud over the governance of private equity.

Mr Brown, former head of the private equity investment program at the $34 billion superannuation fund Victorian Funds Management, and chairman of AVCAL from February to September last year, launched the legal action against its part-time employer in the NSW Supreme Court over his separation pay and the terms of his departure, according to court listings.

Mr Brown’s action followed a short stint as chairman at the private equity lobby group, where he “spent a lot of time refining the strategy of AVCAL and doing a strategic review for the board which formed a large part of AVCAL’s priorities for late 2012 and 2013", a person familiar with the situation said.

For the past few years, AVCAL has been actively lobbying the government to count profits from private equity investments in Australia as capital gains – on which foreigners are not taxed in Australia – rather than income. At the time of his appointment, Mr Brown’s experience as a former investor in private equity raised hope that the organisation would increase its efforts in encouraging investment by limited partners in the asset class.

“David’s investor background reinforces the fact that AVCAL comprises the full private equity and venture capital community, from investors to private equity practitioners and service providers. David is passionate about private equity as an asset class that delivers strong and reliable returns and is already contributing his strategic insights and knowledge to advocate on behalf of the industry," the lobby group said to mark Mr Brown’s appointment last year.

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The sources stated that Ms Woothdorpe was highly reluctant to relinquish her long-held position as head of the lobby group. Ms Woodthorpe has been chief executive of AVCAL since 2006. The association’s insiders confirmed there was no succession planning in place at the organisation. It is unclear, however, whether Mr Brown had any aspirations to become chief executive.

The dispute between the parties has now been settled “amicably", the sources said. However, a second case has been brought against AVCAL’s management, this time involving a female employee claiming unfair dismissal by the lobby group.

Mr Brown declined to comment when contacted by Capital.

Ms Woodthorpe said the two cases were completely unrelated. “I worked co-operatively and amicably with David," Ms Woodthorpe said. “The second matter is a HR-related issue with a junior employee, the nature of which is happening in many workplaces due to the varied complexities of workplace laws. As the matter may come before the Fair Work Commission it would be inappropriate for me to comment on the circumstances other than to say we, and our legal advisors, believe we’ve acted fairly and appropriately. To conflate these matters provides no insight whatsoever and only serves to mislead."